Which of the following are sources of cash to an investor from owning stock?

• A. Amortization and inventory sales
• B. Interest payments and tax refunds
• C. Dividends received and proceeds from selling the stock
• D. Loan repayments and depreciation expense

Answer: (C)

Verified step by step guidance

1. Understand the concept of cash sources for an investor owning stock. Investors typically receive cash through two primary methods: dividends and proceeds from selling the stock.
2. Dividends are payments made by a corporation to its shareholders, usually derived from the company's profits. These are a direct source of cash for stockholders.
3. Proceeds from selling the stock refer to the cash received when an investor sells their shares in the market. This is another direct source of cash for the investor.
4. Eliminate incorrect options by analyzing their relevance to stock ownership. For example, amortization, inventory sales, interest payments, tax refunds, loan repayments, and depreciation expense are not directly related to owning stock as they pertain to other financial activities.
5. Conclude that the correct sources of cash for an investor owning stock are dividends received and proceeds from selling the stock, as these are directly tied to stock ownership.